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Lenders Face GSEs' Multifamily Shift
American Banker (02/24/09) P. 1; Terris, Harry
Fannie Mae and Freddie Mac are poised to securitize more of the multifamily loans in their portfolios, which will affect the types of mortgages that can be offered to owners of apartment communities. That is because securitization requires more standardized loan structures, meaning that borrowers must give up customized terms in return for lower rates than those offered by portfolio lenders. Fannie Mae ultimately aims to guarantee at least $500 million of multifamily bond issues per month. Freddie Mac, meanwhile, hopes to ultimately have a trio of options for multifamily loans: pass-throughs, Wall Street-style securitizations, and loans that are held in its portfolio and financed with Freddie Mac debt.
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Mortgage Finance: Fannie, Freddie Debt to Remain 'Highly Rated'
Washington Post (02/24/09) P. D4
Fitch Ratings says government support for Fannie Mae and Freddie Mac will likely allow the mortgage finance firms to maintain their high ratings. Despite "formidable losses," their senior debt likely will keep its AAA ratings and their subordinated debt will remain AA rated.
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Jumbo Mortgages, Jumbo Headaches
Wall Street Journal (02/24/09) P. D1; Timiraos, Nick
The Obama administration's housing stability plan does not address jumbo mortgages, leaving borrowers with loans too big for purchase by Fannie Mae and Freddie Mac with few options to reduce their payments. Even those with stable incomes, 20 percent equity and good credit cannot refinance in the current market, forcing some to tap into 401(k) plans or other investments to pay down their mortgages so that they are eligible for a fixed-rate conforming loan. Some banks are setting jumbo rates high to discourage borrowers, and realty professionals say some upscale communities are experiencing additional home-price declines in response to the inability of borrowers to obtain jumbo loans.
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Obama's Mortgage Plan for Fannie, Freddie May Face Legal Snag
Bloomberg (02/24/09) Kopecki, Dawn
Rep. Scott Garrett, R-N.J., says President Obama's plan to refinance 5 million mortgages may violate the Fannie Mae and Freddie Mac's charters, and the American Society of Appraisers is considering taking legal action to block the policy. The administration wants to use Fannie Mae and Freddie Mac to refinance loans, but the mortgage finance giants cannot acquire new loans with a loan-to-value ratio of more than 80 percent unless mortgage insurance is in place. Their regulator says the refinancings will be treated as modifications rather than new loans and do not require new valuations, but the appraisal group is worried that its members will lose business as a result of the plan.
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U.S. Clears Path to Bank Takeovers
Washington Post (02/24/09) P. A1; Appelbaum, Binyamin; Cho, David
The Obama administration has revised its plan for providing emergency funding to banks by allowing banks to repay the federal government in common stock rather than cash. The change is meant to improve the health of banks, as they would have more capital on hand to survive a deeper recession. There are some concerns that the move could result in nationalization of the banking system, but some Treasury officials say a takeover of large banks would only be a temporary, last resort.
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Bill Could Help Baltimore Homeowners Avoid Foreclosure
Baltimore Sun (02/24/09) Sentementes, Gus G.; Kay, Liz F.
The Baltimore City Council is reviewing a plan to slow the foreclosure process and stem the rising tide of evictions. The goal is to extend the time between foreclosure and eviction from two weeks to one calendar year in order to encourage lenders to negotiate with owners who are falling behind on loan payments. John Mechem of the Mortgage Bankers Association warned, however, that the measure could prolong the housing troubles by creating "perverse incentives" for homeowners not to pay their mortgages, knowing that they will not lose their homes for at least a year.
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MBA Likes Plan, But Seeks More
National Mortgage News (02/23/09) Vol. 33, No. 21, P. 14; Fogarty, Mark>
Though supportive of the Obama administration's foreclosure-prevention plan, the Mortgage Bankers Association suspects that $75 billion spread out over three years may not be enough to resolve the crisis. At the MBA National Servicing Conference, MBA official Josh Denny said the plan will make it possible for servicers to "help borrowers in trouble and those who may be on the edge of trouble." However, the group wants loan-to-value ratios for Fannie Mae and Freddie Mac refinancings to top 105 percent to help more borrowers; and it continues to fight judicial cramdowns that go beyond certain subprime mortgages originated in certain years.
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Residential Finance News |
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House Hearings Examine TARP, Loan Modifications
The House Financial Services Committee holds two hearings today, one on TARP oversight and the second on mortgage servicers' efforts to help homeowners facing forecosure.
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Studies: Banks Must Improve Outreach To 'Unbanked'
Banks can and should do more in education and outreach to "unbanked" and "underbanked" consumers to bring their uncalculated cash off the financial grid and into the mainstream banking system, according to three separate studies.
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Residential Briefs
Lender Processing Services Inc., Jacksonville, Fla., announced that Private National Mortgage Acceptance Company LLC, Calabasas, Calif., known as PennyMac, signed a multiyear contract to service its first mortgages and home equity lines of credit using LPS' Mortgage Servicing Package.
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QuoteLink
"It really doesn't make any difference that the code violation on this property occurred when the previous mortgagor owned the property and it had been that way for three years...you have got to get that thing fixed at the earliest possible time in order to mitigate the circumstance and to mitigate your own loss."
--Cary Sternberg, senior vice president of REO with American Home Mortgage, Irving, Texas, discussing real estate owned properties and expectations from municipalities as to their maintenance.
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